White House warns about economic impact of ‘fiscal cliff’ on Texas

As Congress struggles to find a compromise to avoid the impending “fiscal cliff,” the White House tried to amp up the pressure on lawmakers by detailing how middle-class tax hiked would affect them.

According to a memo from the Obama administration, “there is no reason to hold the middle-class families in Texas hostage while we debate tax cuts for the highest income earners.”

If Congress fails to reach a solution by the end of the year, Texas families earning a median-income of $65,900 could see an increase of $2,200 in income taxes, the email states.

The White House released similar memos for other states in an attempt to increase support for Obama’s plan, which it claims would save 98 percent of Texans from an income tax increase.

(In contrast, 97 percent of families in New York and 96 percent of families in Connecticut would also be spared from a tax hike if the president’s plan is passed, according to the customized messages.)

The National Economic Council and the Council of Economic Advisers report states that middle-class families drive Texas’s economy, and as such the retail industry has been a key part of recovery. Of 14.8 million Americans working in the retail industry, 1.2 million live in Texas.

“In the 40 months since the recession ended in June 2009, the retail industry alone has been responsible for more than 9 percent of overall employment growth and has added 438,000 jobs in the past 32 months,” the email declared.

It goes on to say that vendors can’t afford tax increases on the middle class, especially during the holiday shopping season which makes up nearly one fifth of nationwide industry sales.

“This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.2 percentage points in Texas,” read the email.

The report cites the recent concerns of high-level players in the retail industry, such as Costco, Walgreens, Macy’s, and Walmart.

“In many ways, Walmart’s customers are at the center of this debate,” said Walmart CEO Mike Duke.

He added that “customers are working hard to adapt to the ‘new normal,’ but their confidence is still very fragile. They are shopping for Christmas now and they don’t need uncertainty over a tax increase.”

“These are not Democratic or Republican problems – they are American problems that affect every individual and industry, including fashion and retailing,” said Terry J. Lundgren, the chairman, president, and CEO of Macy’s Inc.